First Steps to Value

When we talk with health plan CEOs, we hear one reaction more than any other: “I need to spend less on care,” an executive will say. “And I want to improve the quality and value of the care my members receive. But that sort of improvement is about delivery. If you don’t control your own doctors or hospitals, what are you supposed to do?”

It’s true, healthcare providers must play a central role in transforming healthcare. We estimate that roughly two-thirds of the opportunities to reduce healthcare costs relate to delivery. But providers cannot change the system on their own. And health plans are uniquely positioned to drive and enable change: As payers, they can structure reimbursement to help providers shift from a volume-based model to one based on value. Because they create benefit designs and service members, they are well positioned to improve consumer engagement. Given their near complete view of how patients interact with the healthcare system, they will be essential partners in improving the coordination of care. And they have reason to be motivated: The payer business model is unsustainable unless health plans can produce better outcomes for their members at lower costs.

In our work with health plans around the country, we have seen that it is possible and practical to take steps toward value-based care without reinventing the whole company. The larger problems facing healthcare may be complex, but many of them can be addressed with manageable early steps.